Mela Sciences takes out new loan, sells more stock

NEW YORK (AP) -- Shares of Mela Sciences Inc. slumped Tuesday after the company announced a new stock offering, canceled an older stock sale program, and took out a new loan.

The Irvington, N.Y., company said it plans to sell 6.1 million shares of stock for $1.30 a share, bringing it $7.3 million in proceeds after expenses. The sale is expected to close Friday. Mela also said it is terminating a sale of shares at open market prices. In 2012 it agreed to sell up to $20 million in stock at those prices, and it had raised $3.3 million after expenses as of Sept. 30.

The company's stock had been trading well above the $1.30 offering price.

Shares of Mela Sciences closed at $1.69 on Monday, meaning the new stock sale is priced at a discount of about 23 percent. The stock lost 25 cents, or 14.8 percent, to $1.44 in morning trading, and earlier in the session it reached an all-time low of $1.42. Shares have lost more than half their value since July.

Mela Sciences said the proceeds of the new offering will be used to fund the continued launch of its MelaFind skin imaging device in the U.S. and Europe, for further research and development, and other general corporate purposes. MelaFind is a handheld device that uses lights of different wavelengths to create images of a mark on the skin. It is not meant to diagnose melanoma or other skin cancers, but to help doctors determine whether to proceed with a biopsy.

The company also said it has reached an agreement with a venture capital lender for a loan of up to $10 million. Mela said it expects to borrow $6 million in March and it can draw down the remaining $4 million over the next year. The loan will mature in 3 1/2 years, and for the loan to be completed, Mela must raise $12.5 million in equity proceeds. The new stock sale would cover more than half that amount.

Mela started selling MelaFind in March 2012 in the U.S. and Germany. It said the new financing should allow it to continue the second phase of the MelaFind launch in 2013 and into 2014.

Mela had $13.3 million in cash and cash equivalents at the end of the third quarter, and it expects to have $30 million in cash including the money remaining under the new loan.